Frontline upstream companies’ gross profits
In fiscal 3Q15, the gross profits of frontline upstream companies EOG Resources (EOG), Anadarko Petroleum (APC), and Pioneer Natural Resources (PXD) grew by 62%, 40%, and 11%, respectively, on a YoY (year-over-year) basis. These companies’ sales grew by 14%, 26%, and 23%, respectively. In contrast, ConocoPhillips’ (COP) gross profits fell by 21%. The company’s sales fell by 3% on a YoY basis in fiscal 3Q15.
The gross profits for other upstream companies like Apache (APA) and Cabot Oil & Gas (COG) fell by 24% and 36%, respectively, on a YoY basis in fiscal 3Q15. Apache’s sales fell by 14%. Cabot’s sales grew by 16%.
Most upstream companies hedge their production to avoid the impacts of crude oil and natural gas price changes. The above upstream companies also operate in a small proportion in either the midstream or downstream segment. Their main revenue sources are usually from exploration and production activities. The above graph shows the sales and gross profit growth on a YoY basis for the previously mentioned upstream companies.
Before we move to the next part of this series, let’s look at a breakdown of the above companies’ YTD (year-to-date) performances.
- The upstream companies mentioned above fell by an average of 30% on a YTD basis.
- EQT’s (EQT) gross profits grew by 57% on a YoY basis in fiscal 3Q15. However, the gross profits fell by 31% on a YTD basis.
- EOG and Pioneer Natural Resources only fell by 15% and 2.3%, respectively, on a YTD basis. We should note that these two companies outperformed other companies that saw a YTD fall in the gross profit and sales growth.
Meanwhile, the Energy Select Sector SPDR Fund (XLE)—the US-based energy benchmark—fell by 21% on a YTD basis.